Updates

For 2011, the employee tax rate for social security is 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The 2011 social security wage base limit is $106,800. In 2011, the Medicare tax rate is 1.45% each for employers and employees, unchanged from 2010. There is no wage base limit for Medicare tax.

Advance payment of earned income credit (EIC). The option of receiving advance payroll payments of EIC expires on December 31, 2010. Individuals who received advance payments of EIC in 2010 must file a 2010 federal income tax return. Individuals eligible for EIC in 2011 can still claim the credit when they file their 2011 federal income tax return. In addition, if any of your employees expect to be eligible for the EIC and will have income tax withheld from wages in 2011, they may reduce their withholding in order to receive the benefit of a portion of the credit throughout the year.